DoD's budget — the simplified version

E
ven in an average year, unpacking the thousands of pages of narrative
description, supporting materials and Excel spreadsheets that make up the Defense
Department's annual budget submission is not a task for the faint of heart.

But we haven't seen an average budget year in a while, and the 2015 submission the
Pentagon rolled out this week contains what DoD Comptroller Bob Hale wryly called
"special features" when he described it to the Pentagon press corps.

If, like me, you learned in civics class that a federal budget submission
represents a presidential administration's complete request to Congress for
funding during a given fiscal year, understanding what's going on this year
requires a bit of mental gymnastics. The paperwork the administration sent to the
Hill this week is sort of the actual budget, but sort of not.

As we and other news outlets reported last
week, DoD currently believes that sequestration-level funding would mean an
Army of just 420,000 soldiers and 10 aircraft carriers in the "out years," a size
the Pentagon thinks would break its current defense strategy and leave the nation
underprepared for the kind of conflicts it thinks the military has to engage in.
And yet, DoD's latest funding request asks for a force that includes precisely
420,000 soldiers and 10 carriers.

Confused yet? So are the congressional leaders who are supposed to guide the final
decisions on Capitol Hill.

Sen. Carl Levin (D-Mich.) and Rep. Buck McKeon (R-Calif.), the chairmen of the
Senate and House Armed Services Committees, respectively, both opened their annual
posture hearings on the budget with a series of questions that suggested they were
puzzled about even the most basic details of what the budget request does and does
not include. By the end of Tuesday's four-hour Senate hearing, Levin still seemed
unsure about what DoD was up to.

Here's my best shot at a (relatively) pithy explanation.

The Pentagon is, in a way, submitting (at least) two budgets, even if only one of
them is written down in the usual way. One complies with the current budget caps
that started with the 2011 Budget Control Act and have been revised twice since
then. For 2015, it's $496 billion, not counting costs for any yet-to-be-determined
operations in Afghanistan.

DoD officials put that budget together as a planning baseline in case Congress
declines to revisit the sequestration caps for a third time, but they insist the
number is far too low.

So as part of the White House's $56 billion Opportunity, Growth and Security
Initiative (OGSI), they're asking for a supplemental $26 billion. More details are
forthcoming from the administration this week about how the extra money would be
offset in other areas of the federal ledger, but about 80 percent of the tally
would go toward buying back some of the military readiness and acquisition programs that
the military had to throw overboard pretty suddenly when sequestration first
kicked in last year.

The rest would mostly go toward getting the maintenance of military bases back on
track after those upkeep budgets were slashed. One way to think about it might be
as a "get well" fund to fix bad things that have already happened to the military.

Getting that fund across the finish line already seems to be a pipe dream, based
on the political assessments of the House Armed Services Committee, as we
reported earlier this week.

But beyond that, DoD says it needs to exceed the current spending caps by a total
of $115 billion for the four years thereafter. So, the department does actually
ask Congress for that extra funding in those "out years," but unlike in the case
of the OSGI — which only covers one year — the administration does not
offer any offsetting spending reductions.

That brings us back to those soldiers and carriers. As we mentioned, DoD's budget
request, on paper, asks for levels the department itself thinks are too low. But
there's a good reason for that, Defense officials say. If they are going to be
forced to draw the Army down to that 420,000 soldier figure, the only way to do it
in a sensible way is to start the process now. The mechanics of shrinking the
service would take several years and wouldn't be finished until around 2019. If
extra funding suddenly appeared in the meantime, the Army could simply hit the
stop button on its drawdown plan.

Likewise with the Navy's carriers: the U.S.S. George Washington is due for an
expensive complex refueling and overhaul during 2016. If Congress comes up with
extra money, the Navy will continue to have 11 carriers. If not, the GW will come
out of the fleet.

I promised a "pithy" explanation, and I won't begrudge readers if they think I've
failed to deliver. I did the best I could.

But as MacKensie Eaglen, a former Hill staffer and resident fellow at the American
Enterprise Institute told me, DoD probably isn't helping its case by making it
more complicated than it needs to be.

"This is not smart," she said. "There are two budgets, and the result of those two
budgets is this thing that's baked into one that's very difficult to understand,
even for the close budget watchers in Washington. It's coming over with all these
nuances — maybe one program is a sequester item, maybe it's not — and
Congress isn't going to have time to figure out what's already baked into the
plan. What it really does at the end of the day is make it more palatable to
accept sequester. For the Army, it's going to sensitize Congress to the 420,000
number."

Defense officials say the smaller Army in this year's budget is only a matter of
prudent planning and that it would be a trivial matter to switch to the 450,000
figure, and they could also decide to refuel the George Washington and keep it
afloat if Congress gives "an indication" that it intends to add money to defense
in the next couple years.

But as Sen. Tim Kaine (D-Va.) pointed out this week, it's not clear precisely
which congressional tea leaves DoD would be reading before it decided to trigger
those more aggressive budget decisions.

"I'm wondering precisely what kind of indication would be sufficient, given that
we've just done a budget within the last two months and are not likely to return
to one soon," he said.

Hagel's response probably was not comforting. He said only that DoD had tried to
build flexibility into its plans.

"Just like everything else we've brought forward, there will be tough choices," he
said. "But if we don't have those numbers in order to keep that carrier and to
keep that force structure at 440,000 to 450,000, then we'll have to take those
cuts somewhere else. And maybe the decision is to do that. I mean, I don't know.
We've tried to balance this, in a way that makes sense for all of our needs. It's
imperfect."

QDR leaves lawmakers wanting more

I
n conjunction with the budget release, the Pentagon also unveiled the
Quadrennial Defense Review, a big-think document that's supposed to lay out the
Pentagon's global strategy every four years for what it thinks is ahead over the
next few decades.

Rep. Buck McKeon (R-Calif.), chairman of the Armed Services Committee, was not
impressed with the final product. He said he intended to push through legislation
to force DoD planners to start from scratch and report back.

"In defiance of the law, this QDR provides no insight into what a moderate-to-low
risk strategy would be, is clearly budget driven and is shortsighted," McKeon said
in a statement. "The QDR has legal standards to meet for a reason. They were
designed to guide Congress and the Commander-in-Chief as we make tough choices
about resources and security. The information produced by the review process
could be immensely valuable, but is often withheld from those who need to
understand it most."

Gen. Martin Dempsey, the chairman of the Joint Chiefs of Staff, responding to
similar criticisms during a Senate hearing this week, defended the review. He said
it was less detailed than it otherwise might have been because it built on an
interim reassessment that coincided with an earlier round of Defense cutbacks
— the Defense Strategic Guidance that accompanied the 2012 budget.

"That's where this phrase "rebalance to the Pacific" and so forth came from, which
is a long-term project, not an overnight affair," Dempsey said. "And so what the
QDR did was it used the defense strategic guidance as the foundation document and
built upon it, but the themes, the tenets, the principles, the mission areas refer
back to the defense strategic guidance. There is a coherence there that we can lay
out for you."

Military compensation details bubbling up

W
e've already spent a fair amount of time on the air and online
discussing the personnel and pay and benefits changes the Pentagon is proposing as
part of the 2015 budget, so I won't repeat them in this space. One thing officials
have said all week, though, is that they were holding back on one large piece of
the compensation pie — the retirement system — until the Military
Compensation and Retirement Modernization Commission issues its final report next
year.

While that may be true as far as public proposals, our colleagues at the Military
Times newspaper chain got hold of internal documents that reflect DoD's current
thinking on the way ahead for military retirement.

The Times' Andrew Tilghman reports
the plan would call for the military's 20-year retirement plan to stay roughly
in place, but it would up end the all-or-nothing approach to retirement
compensation in several important ways: the government would begin making
contributions to a 401k-type fund for troops who have served as little as six
years, service members would receive incentive payments to stay in the military
after
12 years of service, and the defined benefit that current military retirees enjoy
would become slightly less generous.

Publicly, Defense officials remained steadfast this week in their previous
commitments that any retirement changes should only affect new military members
and not "break faith" with troops who signed up under the current system.

But as in most other matters related to military compensation, nothing will happen
at all unless Congress is willing to upset the status quo.